If you are an owner of a building in a historic preservation district, you may consider taking advantage of the Federal Historic Tax Incentive Program offered by the IRS.

This program is offered in the Internal Revenue Code, section 170(h), which invites owners of eligible historic properties to donate a historic preservation easement on the exterior of the property to a qualified charitable organization.

The historic preservation easement is a voluntary, legal agreement between the property owner and the qualified non-profit organization to protect the historic architectural features and appearance of the building. The donation is made in perpetuity (forever) and will bind any future owner of the property. What the easement means is that the owner can not make any changes to the exterior of the building, with the exception of maintenance work, without obtaining a prior approval by the charitable trust organization. The easement agreement is reordered in the local lands records to provide notice of the preservation restrictions to all future purchasers.

The benefit to you as a donor will be in a tax deduction. You will be able to claim a non-cash charitable contribution deduction in an amount equal to the fair market value of the easement, as determined by a qualified, independent appraiser. Depending on the historic significance of the particular building, the value of an easement can be as much as 10% of the value of the property.

This Federal income tax deduction is granted solely to owner of the property at the time of the donation, not to future owners. The deducted amount can be used by the donor every year for over 17 years from the year of the donation is made. Many states and local tax codes recognize this income tax deduction as well.

If you own a house in a historic district, you may be aware that you can not make any changes to the exterior of your building without obtaining an approval from the Landmarks Preservation Commission. So if your building is already restricted by preservation regulations, why not try to receive compensation for it?

The largest charitable non-profit organization operating today is the Trust of Architectural Easements, which holds easements on more than 760 properties, 519 of them in New York. You can visit their website at: www.architecturaltrust.org

Please make sure you consult with a professional accountant and attorney to learn about all the requirements, eligibility and implications of this tax incentive.